The waiver was put in place back in July after the Office of Fair Trading brought a test case on the issue to the high court in order to see whether these charges were fair and lawful.
After pledging to review the waiver, the FSA believe it to be meeting all of its key requirements, including firms who had it granted to them complying with conditions by communicating with customers and appropriately handling particularly difficult cases.
Though the FSA is satisfied with the conditions of the waiver, the regulator also said that as it recognises the importance of the issue it will work alongside the Banking Code Standards Board (BCSB) to see if firms continue to provide the appropriate service to customers in particualr financial difficulties.
The regulator also said it will be monitoring the terms and conditions of all firms in relation to overdraft charges, after some made alterations despite agreeing not to make adverse changes.
FSA managing director retail markets Clive Briault says: “The test case between the OFT and the firms is a crucial step in establishing certainty about the legality and fairness of unauthorised overdraft charges.
“The waiver we granted in July allowed firms to put complaints about unauthorised overdraft charges on hold until these complaints could be dealt with consistently and fairly. But it was important to review the operation of this waiver to ensure that it was working as intended. Our thorough review shows that it is appropriate for the waiver to remain in place.”
The Financial Services Consumer Panel called on the FSA to continue monitoring the waiver but believes it will be difficult to justify if the court case goes beyond February 2008.
Financial Services Consumer Panel chairman John Howard says: “Although we understand why the FSA has put the waiver in place, it has had the unfortunate effect of delaying consumers’ access to justice, whilst allowing the banks to continue taking money from accounts for what may turn out to be illegal charges. The longer this goes on the more unfair it will be, especially on those in financial hardship.”